Any trade sanctions a big deal for BD, says Wahiduddin Mahmud

Terming any trade sanctions 'a big deal' for Bangladesh, eminent economist Dr Wahiduddin Mahmud says such possible taboo on only one product could create an adverse impact on the country's economy.

"…sanctions on individuals or organisations are their business, it doesn't matter. But trade sanctions are a big deal for Bangladesh. Only one product. If there are new restrictions on it, there will be a big shock to the economy," he alerts.

Dr Mahmud, a former adviser of the caretaker government, also said foreign-exchange reserves are now a matter of great discussion.

He made the observations at a view-exchange meeting on 'the current situation and future of the economy, organised by the Newspaper Owners Association of Bangladesh (NOAB) at a city hotel on Sunday.

Presided over by NOAB president AK Azad, the programme was also attended by former governor of Bangladesh Bank (BB) Dr Salehuddin Ahmed, Executive Director of Policy Research Institute of Bangladesh (PRI) Dr Ahsan H Mansur, honorary Fellow of the Centre for Policy Dialogue (CPD) Mostafizur Rahman, professor of economics at SOAS University of London Mushtaq Khan and Professor and Chairman of Development Studies Department of Dhaka University Rashed Al Mahmoud Titumir.

Founding President and Daily Star Editor Mahfuz Anam, Prothom Alo Editor Matiur Rahman, Financial Express Editor Shamsul Huq Zahid, Karotoa Editor Mozammel Haque and Banik Barta Publisher and Editor Dewan Hanif Mahmud were present at the meeting, among the members of NOAB.

The speakers discussed issues including inflation, reserve crisis, discrepancies in government data including exports, education system and quality, banking problems and crises, foreign debt, dollar exchange rate, restrictions on economy and trade, preferential trade facilities in western markets and institutional framework.

While shedding light on the banking sector, Dr Salehuddin said everything should not be entrusted to the governor to solve the problems of Bangladesh.

"The main thing here is that what is going on in the country as a whole, whether it is called good governance or the way the institutions are running, they need to be said," he said.

Dr Ahsan H Mansur said the country is going through a balance-of-payments crisis.

"I would say it (balance-of-payments crisis) is a medium or moderate crisis. It did not turn into a full-blown crisis. Maybe it will take some time. But in the meantime, the government is responding or has been forced to do some policy response," he said.

He also held '6-9 loan interest rates' largely responsible for the current crisis.

The growth in deposits has decreased, he said, but "the money is out of the bank and the money never came back to the bank."

In his speech, Dr Mushtaq Khan said loan is taken from banks in foreign currency but it is not paid back. "When this happens, you will default at some point," he said.

Power plants have been installed at the highest cost in Bangladesh, Mushtaq Khan mentioned, adding that as a result, the power sector in Bangladesh will be a big burden for the future.

He also observed the biggest problem in the current system of the country is the syndicate and some big business groups.

As a result, competitive environment is not created here, he said, adding that the economy now needs to create a competitive environment.

Dr Mostafizur Rahman said: "We could not achieve any component other than GDP growth in the country. That is, there is a big problem with the data. Growth requires investment."

The investment target of 33 billion dollars in five years came in at 9 billion dollars, he said, adding that the conclusions drawn from these are not consistent with any data.

"Because of that GDP has increased, but the ratio calculation shows that the ratio of imports, exports, revenue - all are decreasing. That is, the economy is going through serious problems," he said.

Dr Rashed Al Mahmud Titumir said everyone knows the economic situation but the question is whether the story of development can continue in the future.

He also said, "Our inflation is happening because of the government's policy."

Citing example, he said money will be needed to repay the loan, which would create another inflation In the opening speech of the exchange meeting, NOAB President AK Azad sought advice from economists on the dynamics of the economy.